BTC Volatility: A Weekly Review from October 28, 2024 to November 04, 2024

On Wednesday, the cryptocurrency price reached an all-time high, initially leading us to believe that we had underestimated the potential of the spot market to surge before the election. However, the price ultimately failed to sustain its peak and quickly retreated, with the $70,000 price point re-emerging as the main resistance level.

Key Indicators: (October 28, 4 PM -> November 4, 4 PM Hong Kong Time) BTC/USD price increased by +0.15% ($68,500 -> $68,600), ETH/USD price decreased by -2.4% ($2,520 -> $2,460). BTC/USD year-end (December) ATM volatility rose by +3.7 points (54.3 -> 58.0), while year-end 25 delta skew dropped by -0.6 points (3.7 -> 3.1)

Overview of Spot Technical Indicators: On Wednesday, the cryptocurrency price reached an all-time high, initially leading us to believe that we had underestimated the potential of the spot market to surge before the election. However, the price ultimately failed to sustain its peak and quickly retreated, with the $70,000 price point re-emerging as the main resistance level. Meanwhile, the peak price set will become the target for the next round of market competition, provided Trump wins the election. Currently, we believe that over the next few days, the price may fluctuate between $66,000 and $70,000 until the election situation guides the next major trend. If Harris wins, the price may break down through the flag support level of $63,500 to $64,000 and decline to $60,000. It is even possible to slide below the support range to around $54,000 in the coming days. On the other hand, if Trump wins, the price may break upwards past $74,000, with the potential to rise to between $77,000 and $78,000.

Market Theme: With the fluctuations in the odds for the U.S. election on Polymarket, the trading activity in the cryptocurrency sector has increased. When the odds of Trump winning rose to 67%, the BTC/USD spot price briefly surpassed $73,600, setting a new all-time high. Subsequently, when the weekend polls pushed the odds back to 55%, the price retreated and tested down to $67,500. The odds of the Republican Party dominating seats also fell from 48% to 37%. Although the gap in odds is narrowing, the price movements across various markets still reflect bullish sentiment and preparation for a Trump victory. The U.S. Non-Farm Payroll (NFP) data was reported at 12,000, far below the expected 100,000. However, the market largely dismissed this, attributing it to recent hurricanes and labor strikes. The BTC/USD spot market saw some fresh inflows after the data release, briefly pushing the price up to $71,500, but then giving back the entire gain. The market is taking a cautious approach to chasing the price during the election period. Microstrategy announced a three-year plan to invest $42 billion in Bitcoin during last week's earnings report, primarily raising funds through issuing stocks and convertible bonds to increase its Bitcoin holdings. While this should have a positive impact on prices in the medium term, the short-term price trend is mainly influenced by the election.

$BTC Implied Volatility: This week's actual volatility has increased, primarily due to changes in Polymarket election odds. The odds fluctuated between 58% to 67% and then back down to 54% (with Trump in the lead). High-frequency actual volatility rose to a moderate level in the 40s, which must be acknowledged as not particularly high historically for Bitcoin, but is significantly above the levels seen in recent weeks. Additionally, the price changes following the settlement date of November 1 show that the market's short gamma exposure is increasing ahead of the election. The level of implied volatility this week has received good support as the market has seen a wave of demand for options expiring in November, mainly targeting the expiration date after the U.S. election. Demand has focused on upward strike prices between $75,000 and $80,000, but we have also seen some pure trading volatility straddles and spreads. Influenced by substantial demand, volatility has rebounded from recent lows. The market's pricing of event volatility on election day dropped to recent lows over the weekend, as the evident high rolling volatility data and theta data encouraged retail investors to hold short positions over the weekend. Given that the volatility for straddles expiring the Friday after the election and FOMC is only at a 7% premium, we believe that holding long gamma in event volatility should have sufficient profit potential. A mere change from 67% to 54% in odds prompted the price to drop from a high of $73,500 to a low of $67,500 last week, suggesting that it should not be difficult for the price to rise to $75,000 if Trump wins or fall to $60,000 if Harris wins.

Skew/Kurtosis: This week's skew continues to decline, seemingly tracking the movements of the spot price and changes in election odds. The skew for the November 8 expiration has actually reversed downward quite sharply, reflecting the market's preparations for a Trump victory and the belief that if Harris unexpectedly wins, it would lead to a larger downside in prices. Kurtosis has gradually increased from its low this week, as buyers have appeared on both sides of the real-time price, especially for the November expiration. Wishing everyone good luck in the coming week! You can use the SignalPlus trading indicator feature at t.signalplus.com for more real-time crypto insights. If you want to receive our updates instantly, feel free to follow our Twitter account @SignalPlusCN, or join our WeChat group (add assistant WeChat: SignalPlus123), Telegram group, and Discord community to interact with more friends. SignalPlus Official Website: https://www.signalplus.com